BURGER KING EATS INTO NATIONAL FOCUS
AS CORPORATE STAFF DWINDLES, LOCAL EFFORTS GROW

Last summer's wildly successful "Lion King" promotion gave Burger King Corp. a leonine image in the eyes of consumers.

These days, Popeye might be a more accurate symbol.

Like the cartoon hero's mighty forearms, Burger King's bulk is shifting away from its frame and out to its appendages as the marketer scales back home office operations and continues to sell large blocks of corporate stores to franchisees.

And while the capable "Get your burger's worth" campaign is spinach enough for now, industry observers said headquarter's decreasing involvement in restaurant operations and marketing may fracture the Burger King brand in the long run.

"It would appear there isn't anyone running the ship," said one franchisee, referring to layoffs last year that eliminated half of 1,200 corporate jobs worldwide. While 250 of those employees were reassigned to field posts, the net job loss was 350 worldwide and 203 at Miami headquarters.

The long-term effects of decimating the corporate staff are hard to gauge; Burger King's sales for fiscal 1994, ended Sept. 30, were quite healthy. On the strength of the "Lion King" promotion, comparable store sales in the U.S. for the year ended Sept. 30 were up 6.1%.

And franchisees throughout the system are finally happy with Burger King's national marketing strategy, which focuses on the flame-broiled Whopper.

"We have not compromised our national marketing platform or department," said John Cywinski, VP-U.S. marketing.

Currently operating without a CEO, Burger King will need strong leadership and considerable national marketing resources to defend itself against the formidable price war being waged by McDonald's Corp. In recent months, McDonald's has shifted most local marketing dollars to national network buys in support of its 95 cents burger of the month.

Burger King, meanwhile, has moved more of its $250 million annual marketing budget to local efforts in recent years.

One former Burger King marketing executive calls the emphasis on field operations the "Dairy Queening" of Burger King.

"In keeping with franchisees' desire to run their own destinies, you reduce any enthusiasm for national marketing," said Gary Langstaff, an independent database marketing consultant who served as Burger King's marketing chief in the late '80s.

Last fall, Burger King sold 68 corporate stores in Chicago and 100 in Louisiana.

Lawrence Jaro, a Colorado franchisee involved in the purchase of the Chicago-area stores, several years ago worked with the Denver co-op to hire The Exline Agency as one of Burger King's first local shops.

In an interview last year, Mr. Jaro said other Burger King markets were closely watching Denver. "I think the future of the advertising effort will be focused on local markets," he said.

The sale of Burger King units comes at a time when competing fast-food chains are maintaining or rebuilding their stable of corporate stores. Arby's is steadily repurchasing franchised units, planning to increase its percentage of corporate stores to 20% from the current 11%.

McDonald's and Wendy's International have long maintained their ratio of corporate stores at 16% and 30%, respectively. KFC Corp. has 33% and Taco Bell Corp. owns almost all of its units.

A Burger King spokeswoman said the company "continues to buy and sell franchises when and where it makes sense."

Other executives close to Burger King, which owns 8% of its stores, said the marketer has made clear any offer for corporate stores will be considered.

Burger King's willingness to deal traces back to its London-based parent, Grand Metropolitan. Analysts for years have questioned Grand Met's dedication to the fast-food business. But speculation about Burger King's sale has died down as sales improve and as Grand Met searches for a CEO to replace James Adamson, who left Burger King last month for Flagstar Cos., parent of Denny's Restaurants.

According to one franchisee, remaining Miami-based executives have told interim CEO David Nash they don't want a transplant from Grand Met's London office running Burger King. At the least, Burger King hopes Grand Met will "leave [Exec VP-Worldwide Marketing] Paul Clayton alone and give him the resources to build the brand," one franchisee said.

But Grand Met is unlikely to make sizable investments in the chain.

"Grand Met is interested in keeping Burger King cash-rich," said one London-based analyst. "They are clearly selling company stores to reduce the capital intensity of the business."